John Murray
NEWTON, MA—Industrial Logistics Properties Trust is acquiring two portfolios for total amount of $905.3 million, excluding acquisition related costs. One transaction is an eight-asset, 4.2 million square foot portfolio located in Indianapolis and Cincinnati that is trading for $280 million. The other deal is a portfolio of 18 properties totaling 8.7 million square feet. The seller is Cole Office & Industrial REIT and the purchase price is $625.3 million.
The acquisitions have additional importance to Industrial Logistics: When they close, Amazon and FedEx will be its largest tenants accounting for 13.8% and 3.6%, respectively, of annualized rental revenue.
Industrial Logistics has been on a steady acquisition path since its IPO in January 2018, having bought more than $1 billion of properties. These transactions illustrate the REIT's plan to grow its industrial asset base using low cost debt, says John Murray, ILPT's president and CEO. “We continue to be encouraged by the growth of e-commerce and logistics industries and the strength of the nationwide industrial market,” he says.
The Indianapolis and Cincinnati portfolios represented a GAAP cap rate of 6%. Industrial Logistics closed on seven of the eight properties this week with the remaining property, which is still subject to due diligence, expected to close within 60 days. The eight properties are 100% leased to 10 tenants and have a weighted average remaining lease term of more than four years, a weighted average building age of 13 years and a weighted average clear height of 34 feet. Investment grade rated tenants account for 59% of the annualized rental revenues.
The portfolio that Industrial Logistics is acquiring from Cole Office & Industrial REIT is located in 12 states and has a GAAP cap rate of 6.4%. This acquisition, still subject to customary closing conditions, is expected to close within 60 days. The 18 properties are 100% leased to 13 tenants and have a weighted average remaining lease term of more than nine years, a weighted average building age of nine years and a weighted average clear height of 33 feet. Investment grade rated tenants account for approximately 74% of the annualized rental revenues.
Industrial Logistics is funding these acquisitions with cash from its recent $650 million mortgage financing and by drawing on its $750 million revolving credit facility.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
